Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Financials ETF (
RYF Quick Quote RYF - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Financials - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.
The fund is sponsored by Invesco. It has amassed assets over $449.52 million, making it one of the average sized ETFs attempting to match the performance of the Financials - Broad segment of the equity market. RYF seeks to match the performance of the S&P 500 Equal Weight Financials Index before fees and expenses.
The S&P 500 Equal Weight Financials Index is an unmanaged equal weighted version of the S&P 500 Financials Index that consists of the common stocks of the following industries: banks, diversified financials, brokerage, asset manage-ment insurance and real estate, including investment trusts that comprise the Financials sector of the S&P 500 Index.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.70%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.
Looking at individual holdings, Hartford Financial Services Group Inc/the (
HIG Quick Quote HIG - Free Report) accounts for about 1.92% of total assets, followed by Franklin Resources Inc ( BEN Quick Quote BEN - Free Report) and Assurant Inc ( AIZ Quick Quote AIZ - Free Report) .
The top 10 holdings account for about 16.37% of total assets under management.
Performance and Risk
So far this year, RYF has added about 33.07%, and is up roughly 58.09% in the last one year (as of 06/07/2021). During this past 52-week period, the fund has traded between $35.89 and $62.70.
The ETF has a beta of 1.25 and standard deviation of 30.52% for the trailing three-year period, making it a medium risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.
Invesco S&P 500 Equal Weight Financials ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RYF is an excellent option for investors seeking exposure to the Financials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Vanguard Financials ETF (
VFH Quick Quote VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF ( XLF Quick Quote XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $10.74 billion in assets, Financial Select Sector SPDR ETF has $45.51 billion. VFH has an expense ratio of 0.10% and XLF charges 0.12%. Bottom Line
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